If you’re uncomfortable with risk, entrepreneurship might not be for you. Building a business from scratch based on nothing but a good idea is inherently risky. Despite extensive planning, there’s so much that can go wrong.
You can minimize risks but cannot eliminate them. Whether you’re investing in a brand-name franchise or developing a unique business concept no one has ever tried before, the best strategy you can aim for is to identify and control for certain risks in advance.
The time to develop plans is early in the process. You want to factor in risk is before the airplane leaves the gate, not after it starts hurtling down the runway. Because if you do run into unexpected turbulence, the last thing you want is scrambe for short-term solutions in an emergency.
So as you move toward starting any business, having done your planning and due diligence, what concrete steps can you take to control for risks in advance and minimize their effects if things head south? Consider these possibilities. They can form the foundation of a sensible risk-reduction plan:
- Freelance or consult: This ultimately transactional approach lets you deploy your existing skills without exhibiting the level of engagement you’d need to demonstrate if you were an actual employee. Freelancing and consulting let you operate independently and get paid well while you develop your business startup separately. If you’re new to this mindset, take common-sense precautions to avoid potential clients with red flags. Better to woo established companies that need the most marketable of your skills. Freelancers and consultants usually get more tactical flexibility than employees and are often highly respected for their competence in key subject areas.
- License: If your business model lends itself to duplication, you may want to explore licensing it early. With a kink-free prototype that works reliably, your upfront costs may be lower than building the business up one location or territory at a time. And you’d have the added advantage of upfront and ongoing licensing fees flowing into the business. The biggest downside with licensing is ensuring other people’s work quality. If you can control for that issue, licensing can provide a significant revenue stream as you ramp up.
- Take on a partner: A pair of entrepreneurs can often overcome startup challenges more effectively than someone working solo. Assuming you and your partner(s) have complementary skills, backgrounds and work styles, you can leverage the synergy of the partner dynamic. You can also pool funds to boost operating capital. The tradeout, of course, is that partnering costs you some degree of individual autonomy.
- Work for a competitor: If you can put your own business on the back burner temporarily, you can gain experience, credibility and contacts if you’re already working full-time in the industry where you hope to stake a claim. Unlike freelancing, this longer-term strategy requires you to throw yourself into the job, to soak up as much knowledge as you can, while developing and tweaking your own business concept in your spare time. While you should never misstate your intentions with any employer, you’re under no obligation to volunteer details about your future plans either. Ultimately, you can exit your full-time job at the exact point when the job is keeping you from making headway on your new venture. You may even be able to convert your employer into one of your first customers.
- Work part-time: Establish a regular income while you take your idea to the next level. Ideally your part-time gig will leave you with time and bandwidth to focus on your startup when not on the job. Since the work is part-time, the employer won’t be looking for the same go-getter qualities as they’d want in, say, a full-time management trainee.
For more tips on minimizing risk and boosting your chance of success, contact us at
1-855-WHY-PANGO (1-855-949-7264). Our professionals can work with you to develop financing that works seamlessly with your startup plans.